Chelsea Building Society Offers Leading Rate.

by Mark Johnston

                             Chelsea Building Society Offers Leading Rate.

A couple of months ago the HSBC caused a stir in the mortgage market when it launched the cheapest ever fixed rate deal, this then prompted other lenders to join the race to slash prices.

However, as their fixed tranche of funding was exhausted they then pulled the deal after a matter of weeks. In light of this the intense competition for the lowest ever rate eased off.

Those headline grabbing rates soon disappeared, but now it seems the competition could be reignited as the funding for lending scheme appears to be producing some cheaper mortgage deals for those that really need it.

The Chelsea Building Society has recently launched  their lowest 5 yr fixed rate mortgage at 2.99 per cent for 70 per cent loan to value (LTV), which is the lowest on the market at the moment.

Previously a sub 3 per cent 5 year fixed rate borrowers needed a 40 per cent deposit.  This particular deal now means that borrowers will now need 10 per cent less as a deposit to qualify for a low rate offer.

Fees charged for this new deal are £1,495 which are around the same as those charged bySantanderfor their 40 per cent deposit 5 year fix.

The Chelsea Building Society is not the only lender to cut fixed rates, other lenders have also announced rate cuts on 70 to 75 per cent Loan to value deals  this month.

The Yorkshire bank has a 5 year fixed deal with a rate of 3.04 per cent and a fee of £995, while Tesco bank has a 5 year fixed deal with a rate of 3.39 per cent with a fee of £995.

HSBC and Nationwide building society both offer 5 year fixed deals with a rate of 3.49 per cent, however the fee for Nationwide’s deal is only £499 whilst HSBC’s fee is £995.

According to figures, in general, five year fixes seem to continue to offer the best value for those wanting a fixed rate mortgage.

Over the last few months 5 year fixed rates have become highly competitive as lenders cut their rates to attract new business.

Advisers like London & Country Mortgages (L&C) have suggested that there has been more interest in five year fixed rate deals lately.

Recent data has shown that in October 2011 there were approximately 418 5 year fixed rate products on the market. In October this year there are approximately 508 on the market.

John Charcol, one of the biggest mortgage broker firms, revealed that 30.4 per cent of its clients went for a five-year fixed rate mortgage in September, while back in 2010  just 5.7 per cent  opted for this type of deal.

It does therefore seem that despite the fact that many economists believe it could be years before we get a Bank of England interest rate rise five year fixed deals are enjoying a surge in popularity as homebuyers opt to lock in to some of the lowest rates ever seen in the UK.

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